How Investing in the Stock Market Saps Your Wealth

[Account Closed]

Today, in Sept 2018 the Stock Market is at 28,000. An all time high. The average wage is $26 per hour. It takes 1,077 work hours to “buy the market”. That is, if you buy one share each of the stocks of the Dow, the cost would be $28,000 and takes 1,077 work hours or 27 work weeks or 6 ½ work months of your time for $28,000. And that is before any profit you may hope for. That is cash out, not profit.

In 1971 doing the same would take you 250 work hours. It now takes you 4 times as much of your time. So in essence the Stock Market is ¼ of what it should be for your investment to make sense and for you to stay even.

When the Stock Market crashes, and it does crash from time to time, it crashes hard and you have to start the clock all over again. And then, there are the broker fees.

However, In real estate, last week I bought a 3 bed 2 bath fully remodeled house for $9,000 in Phoenix AZ.

It shows a value of $270,000 on Redfin. I took over the financing on a Subject To. There were no realtor fees.

I took over the note of $185,000 and gave the seller $9,000.

I have a $270,000 asset, minus $185,000 liability (the underlying note) – minus my $9,000 and I am ahead $76,000.

It took me about 12 hours of work. I then turn around and sell them Turnkey to Investors. That takes another 5 hours of work. So, I am into the property for about 17 hours of work. Do the math. The investor gets $25,000 as an Option from the Tenant Buyer. Another win. That is Capital at work.

It is not distressed. It's not condemned or toxic. It is not in foreclosure. It is not an HOA sale. It is not an REO. It is not a Tax Lien. None of that. It isn't on the MLS. It isn't a Condo. It isn't a Town Home. It isn't a Mobile.

It is a beautiful, safe, ready to live in single family property.

The Stock Market is for people who don’t value their time or are bad at math, or both.

[Josh E.]

@Mike M. I believe your argument is flawed, as you are comparing apples to oranges. You put in 17 hours of work for your 76,000 gain. That is fantastic by all accounts, but you are describing a job, not an investment. The gain would not happen without you working those 17 hours or your prior experience in putting together similar deals. Putting money into the stock market takes all of 30 seconds to do. The market goes up and down, but you are not spending any more time or effort to create the growth. Real estate is a powerful tool, and many times can work out to be more advantageous than the stock market. But saying you have to work 6 months to even enter the market is obviously not correct, as you can buy an etf or mutual fund that owns the entire market for as little as 100 bucks, and without fees no less. In summary, your job working 17 hours to get 76,000 is a fantastic job. But it still is a job that requires time, energy, effort, and experience. You are therefore compensated for the specific skills that you possess. An investment into the market is not a job, takes no time or energy, and requires no skill other than knowing to buy a correctly diversified mutual fund or etf. Comparing them in this manner doesn’t make sense.